What is Contract Packaging?
Contract packaging refers to an outsourcing arrangement where one company contracts another to package products on its behalf. It involves handling all aspects of secondary packaging and fulfillment for a brand owner. This allows brand owners to focus on core competencies like product development, sales and while leveraging professional packagers' expertise and infrastructure.
Keys Steps in the Contract Packaging Process
There are several key steps involved in the contract packaging process:
Product Specifications and Labeling Requirements
Contract packagers need detailed specifications on Contract Packaging requirements along with branding and labeling instructions from the client. This includes pack styles and sizes, materials to be used, printing and labeling design requirements etc. Ensuring clarity on specs at the outset prevents delays later.
Preparing the Packaging Facility
Upon receiving specifications, contract packagers arrange the necessary packaging lines, materials, labeling equipment and warehousing space as per requirements. Specialized equipment may need to be procured or existing lines modified or augmented to fulfill the client's needs. Compliance with regulatory norms is also validated.
Packaging, Quality Control and Inventory Management
The actual packaging takes place as per agreed production schedules. Contract packagers implement quality control protocols for checks on packaging, labeling, weights and counts. Tracking systems help in inventory management and fulfillment of customer orders. Periodic audits ensure consistency in quality and service levels.
Warehousing and Order Fulfilment
Finished packaged goods are stored in the packager's warehouse from where customer orders are fulfilled. Order details are received, checked for accuracy and dispatched within committed timelines. Strict protocols ensure safety and traceability during warehousing and distribution.
Regulatory Compliance and Certificate Management
Ensuring adherence to industry and region-specific packaging, labeling and logistics regulations is crucial. Contract packagers maintain necessary certifications and keep abreast of regulatory changes to continue compliance. This provides clients peace of mind regarding their brand reputation and legal obligations.
Benefits of Contract Packaging
There are significant benefits that drive companies to choose contract packaging models:
Capital Expenditure Savings
Brand owners avoid huge upfront investments in packaging lines, materials inventory and warehousing infrastructure which contract packagers already have in place. This reduces fixed costs and lowers the business' capital requirements.
Operational Flexibility
Contract packagers are equipped to quickly adjust production volumes and packaging styles according to demand fluctuations without major investments on client's part. This offers better flexibility and responsiveness compared to in-house packaging.
Focus on Core Business
Outsourcing packaging allows brand management to concentrate on new product development, sales, and other core functions where they have specialized expertise. This improves strategic focus.
Regulatory Compliance Expertise
Contract packagers make significant investments to keep abreast of complex regulatory frameworks for packaging, labeling, logistics etc. This passes compliance responsibility and expertise to a specialized service provider.
Quality Assurance Capabilities
Professional packagers have deep experience and quality control systems to consistently ensure packaging and labeling accuracy at scale. This assures clients of maintaining high product quality standards.
Risk Mitigation
Outsourcing non-core activities mitigates risks clients would otherwise face from investments, fixed overhead and compliance responsibilities related to packaging functions. Contract packagers effectively assume these risks.
Key Factors in Choosing a Contract Packaging Partner
Selecting the right contract packaging provider is crucial for sustained success. Key factors to evaluate potential partners include:
Industry Experience: Check years of experience, particularly in client's industry which requires specialized packaging and compliance know-how.
Production Capabilities: Assess facilities, machinery, production throughput and packaging formats handled to match client's short and long-term needs.
Compliance Record: Request information on regulatory audits, certifications and quality systems to ensure consistent adherence to compliance requirements.
Warehousing Infrastructure: Inspect warehousing and order fulfilment capabilities like storage space, tracking systems and delivery timelines.
Pricing Structures: Understand pricing models like cost-per-unit, minimum order charges etc. to facilitate cost projections and budgeting.
Customer References: Speak to existing clients about experience working with the partner, reliability of service levels, issues faced and resolution timelines.
Financial Stability: Check partner's financial statements to ensure their viability to support client's packaging needs for the long run without disruptions.
Upon satisfactory due diligence, signing a definitive contract with agreed service level terms formalizes expectations from both sides for a successful contract packaging partnership. Proper supplier selection thus forms the cornerstone for leveraging outsourcing benefits with assured quality and on-time fulfilment.
Get more insights on Contract Packaging
One advantage of pharmaceutical contract packaging is that it makes complying with pharmaceutical serialization requirements easier for pharmaceutical companies.
Pharmaceutical serialization is the process of assigning a unique identifier in the form of a serial number to every sealable unit of every prescription product that is manufactured.
A serial number provides a wide range of information about a product, including the product’s origin, expiration date, batch number, and national drug code.
The main goal of requiring pharmaceutical serialization is to prevent the production and sale of counterfeit drugs.
While for this reason, pharmaceutical serialization is certainly important, it also makes the process of pharmaceutical packaging a lot more difficult.
When faced with the new pharmaceutical serialization requirements, many pharmaceutical companies that handled their own packaging in-house ended up struggling.
